>> inflation is evident that there is sticking. >> we are now transitioning to an environment where central banks are invited over how we bustled with those rates. >> is all about real rates. >> interest rates are too low for too long. >> in some respects, the fed has been dealt a better hand than the ecb. >> this is bloomberg surveillance with tom, jonathan ferro, and lisa abramowicz.

>> you remember the cpi print. >> exactly. maybe, but it does not seem to be playing out. >> live, good morning. i feel like a lifetime ago. equity futures are down 1.3% on the s&p. adding to the losses of yesterday, what did the president say that had an effect on this market. chairman powder -- chairman powell didn't say this and couldn't say it? >> what when wished we have to speak? were going to go and go hard. also the projection change. they upgrade the forecast for inflation and they had a hawkish expectation for what they are going to do. >> internally and italy, on thursday, they were updating things 30 basis points with another 21. how quickly does it start to become a problem? >> i wonder what is going to happen with that at the same time. you had better than expected data out of europe over the past 24 hours. they are leaning on a bit of strength and reprieve from the natural gas prices, but to your

point, they do not believe in some of the hawkish speak with a lack of credibility. >> are you excited? >> you are. we've got fed speak. >> i am wondering if we push back against the market. if we say what built up rid the market doesn't believe this. but we have to punish you, which is essentially what some of the rhetoric had been earlier in the year. >> benefit shows are super hawkish. super hawkish. they sell at the president, fed official. we are looking forward to catching up with fed officials. were going to go to the price action on the s&p. we are lower by 1%. we are talking about the bond market in europe, with a tenure in america. another for five basis points. 34942. euro-dollar seems to be stuck between a rock and a hard place. is this positive? the currency, is it negative?

the ecb is determined to hike interest rates on a recession. >> this is the dilemma for all your. the more hawkish you we have been, the more you start to see strength in that currency. it is turned on its head because of weakness. we are struggling with that. you see that with a lack of direction in euro-dollar. right now, what i am looking at his fed speak. we get a host of it. it is exciting. the fed president is juggling that alongside kathleen hays. later in the day, the fed president is at noon, and michael mckee has to fed president at 3:30 p.m.. how much are we pushing back against the optimism and hope that they have been equity markets? we get the s&p global manufacturing services for the month of december. do we get a sixth consecutive withdrawal for some of the basic manufacturing and services

sectors in the u.s.. do we have a sense of the soft landing or how people interpret that. have people left for the day? >> if you look at the data, retail sales are the worst in 11 months did they drop the most in 11 months print they dropped industrial production for the first time since june, and jobless claims have ripped up the script to 11. close to 200,000, that is confusing for a lot of people. ask people aren't looking at that and they will watch the world cup at 10 a.m.. france will face off, and basically they are cashing in for the year. >> and tk as well. he is away, and he will come back on monday. he has france's winning team, and his bracket is absently dominating. >> i think he placed 30 on the firm at a thousand. how do i feel about that? >> you gave him 20 seconds to talk about that. here is your victory lap and the issue is, and i am terrible about this. i said this ahead of time.

he chose his teams based on the colors of their jerseys. he likes blue, so he went with argentina, but he likes france and he blew it a little bit more. >> that was the logic that went into this. >> that bothers you because he gave a lot of thought to this. >> it's a tiebreaker and the world cup bracket here and bloomberg on the terminal. you have to choose how many goals are scored, so about a hundred 60. you know it, with its market for. that's much to knows about football. >> no one thinks he's coming from a place of knowledge. >> it is interesting to see that, and the one thing that has been a takeaway has been messy has won out over rinaldo in terms of the best player and the one who is going to be most respected going down. >> big time. let's see how things take shape. this is how they're taking shape this week. president lagarde with her most hawkish address. >> anyone who thinks this is a

pivot for the ecb is wrong. we are not pivoting. we are not wavering. we have more ground to cover. we have longer to go. this is not a pivot. we are not slowing down. we are in for the long game. >> us go through that. they are not pivoting or wavering. we have more ground to cover. we have longer to go. where in it for the long game. that was pretty blunt we had >> them bloomberg came out saying that a couple members on the rate hike, that was a serious contention, so adding to a feeling that there is a lot of feeling to curtail inflation. >> had a most -- multi-asset solutions. i would love to hear from you about what we've heard the bank of england. >> it was refreshing and clear and concise from president lagarde. sometimes, in the u.s., we start off their, and we know a sentence is too long, and we provide some wavering advice, but regardless of the fed speak

or the communications, the story of 2022 has been one of consistently moving in a hawkish direction and continues to do so. i think if you look at what's going on in the labor market, you can understand why. we've got 75 basis points of hikes left on the docks, and you fight the fed on this at your peril. that is the reason why a lot of people are wondering why so many people are fighting with the fed with of consensus is fighting the fed. looking at the terminal rate, with the end of next year, 4.4%. it is 5.1%, and how does that really squeeze out risk appetite. what has to given markets as people get back to the fed's point of view or as the fed drops it the market. market has misinterpreted a couple things print we have seen a drop over the last couple of months. that is encouraging, but if you look at where it is coming on,

it is from goods. it is primarily from flexible items. what you are not seeing at this point, and the that i think is starting to call this out more acutely, but you are not seeing it occur in the service prices, particularly in sticky price goods and wage inflation. you are simply not going to get to a consistent to percent inflation rate if you are running wages between five and 6%. the only way to fix this on labor market is to get back to you librium. the reason the fed has not been clear is that is not with the market would like. it is delicate politically to say we need the employment rate to go above that. ultimately, i think that is where it needs to go, and that is where they are pushing. you can see good prices fall. that will not dissuade the fed, but clearly, this week, they need to get to the labor market to equilibrium, and they are not their area. otherwise, they risk a re-accelerated inflation it they

have an stress that you. >> we heard that. we just want to say this quote. the central bank is tightening, and that is what he's talking about. with what you just said, at 400 basis points, there is a fed tightening and i months and we will get another 75 in the next five to six months print they throw to the ecb with the hundred basis points. they like to get 125, more expected over the next nine months, and he said this. i wonder if you share this view? quicker labor markets right, quicker to that bear market. you share that view? >> i do. i don't know if it will play out that way. the recession is the bull case. if you get a recession, if it has some depth, if you ring out inflation, you're on the other site of it. you can get back to some monetary stimulus in right back where you were pandemic red what is emerging and has us concerned is that 2023 could be a widow maker in terms of the market. you have two consensus views out

there. one is a soft landing crowd, the other is an early recession. you see a lot of this in the strategist community. a first order recession. you are well on your way to recovery by the back half, but we are starting to think that the trade deck causes the most pain for most people and will be most likely is a later recession that is deeper. it takes longer for the labor markets to break. the fed has to go further to re-up inflation, so you can have a scenario where the soft landing folks are breaking their arms patting themselves on the back, and the early recession folks are capitulating right as you get a second half of meaningful slowdown, and that should be a very difficult environment to navigate because it means you could have a first-half rally. we think the word of the day is being wrong for a year, yes, it

will snow, but it may be later as you get ray to check out for the final full folio arrangements you are doing to prepare >> we are slightly underway to equities, but we have a preference for dividend paying. defensive stocks are doing well, and we have cash. you want to lengthen duration. everyone wants to lengthen duration, but is not as compelling as it would be a 4%, so we will be patient and lengthening the duration. we are under credit, and probably not underweight with stocks as we would like to be heading to a recession on a first-half rally we have abilities to produce a pay. we will see how things break. >> import to catching up with you. thank you for everything. we appreciate it.

good to catch up as always. >> i am really confused by this -- on the one hand they say no forward guidance, and on the other, the offeree or guidance. listen to this. meeting by meeting, but ultimately indicating we are going 50 per the next couple of meetings. what is that about. >> the not going to tell you what they're going to do, but they're going to tell you what they're going to do. the problem is when you have markets that are forward discounting mechanisms, how do you not provide for guidance if you want to use financial conditions as your tool to affect my trade policy. make your head spin. there is no for guidance and no cut. just make sure he price setting. >> very helpful. investment management in the next hour. a soccer cpi print. i tell you it feels like a lifetime ago. this is lower again this morning. this is bloomberg. >> keeping up-to-date with news from around the world. first word with niece -- lisa mateo. russia has launched another

large-scale missile attack on ukraine. several cities have been hit, including the capital. widespread power outages have been reported. the attack comes a day after a top ukrainian army commander warned there is no doubt russian purses will try to seize kiva soon as next month. the russian assault in the spring failed. in beijing, rapidly spreading covid outbreak has turned the capitol into a virtual ghost town. that underscores the cost of president xi jinping's turn away from covid zero. the evidence suggests entire families and offices in beijing have been, inspected and just the span of days. that could be a preview of what china faces. the senate has averted a possible shutdown of the u.s. government. thursday night, it passed a funding bill needed to keep the government business past saturday. that gives negotiators more time to hash out agreements on funding levels for federal agencies over the current fiscal year. twitter has suspended the accounts of several journalists.

muska says they were endangering his family by posting real-time locations. journalists deny that. though suspended including reporters from the washington post, near times and cnn. boeing is closing in order for 200 of its own 737 max jets. that is from air india. they've learned two sides are trying to wrap up talks before the holidays. they are working to rebuild the formerly state-run airline. global news, 24 hours a day and on quicktake charge by more than 2700 journalists and analysts more than 120 countries. i'm lisa mateo. this is bloomberg.

>> we need to be prudent. entering into 2023. we are postponing just waiting to see how the environment is turning. but i think we need to also carry on investing. >> the ceo facing tougher times. mike matteo coming yesterday out of wells fargo. this is what they set about the financials in the united states. they should perform better in an upcoming recession than for any other in modern history. we went on to say that banks are prepared for this moment for over a decade. now we are talking about relative terms or absolute terms did >> that's the amount of cash they have on their balance sheets. the fact that we have highly capitalized banks that have been arguing that they are too safe, and have not been able to invest and suddenly risk is toxic, and they have the ability to keep surviving, so this is why they see them rising 50%. >> that's my point.

you're looking for relative outperformance to the index or to another sector. but you look absolute returns 50% of that next year going into a recession in america. >> the idea is they been so beaten up for so long, they've been so undervalued that suddenly people view them as more of a play on a new cycle. you can argue that they have fabulous controversial cause. >> and what proper that be? >> a toaster? >> you can get a toaster next time. >> if we can get a 50% move, we will know more about banks. it show time. we'll pick up on that a little bit later. on the equity side of thing. let's head to europe with maria brussels and head down to d.c.. we have amh. can you help us all understand whether europeans -- where they are on this effort when we talk about capping prices? >> well, you are confused, i've

been confuse come our viewers have been confused, because this is a conversation that's been going on for months, but just reset, taking everyone back free weeks, europeans have said the tgf, that is the main benchmark for gas prices. it no longer reflects the nature of the european energy market which has moved away from russian gas. they want to put it cap on the maximum price you can pay on that. the initial proposal by the commission is to cap it at 270 euros. that was not agreed, and yesterday night, the vast majority of them agreed that there should be a cap, but change the price range. the range is now between a hundred 70 euros two a hundred and 20 euros. what has changed here is that there are now a majority to get this price cap going, and they have a deadline rid they told the million -- ministers, you have to get this deal done.

it cannot drag into 2023. the question is how do you settle. what is the price point? we don't know. >> part of the reason we are struggling is because suddenly, you're not making this a close market. it is not a market. i am wondering from your perspective, whether the disagreement comes from who profits on these right -- supply demand economics. do you have to finance an energy company and natural gas producer, or do you tell them this will be on you. keep producing, but we will not pay you? >> the fundamental disagreement, and maybe i am guilty of this is that when we talk about the energy market, the reality is, there isn't one. you have 27 countries who have different systems and have a completely different energy mix, and some worry about supply and others worry more about price. some have a fiscal capacity, and others do not have a fiscal capacity.

the italians are fuming after that decision yesterday from the european central bank and the message from the italian prime minister. there needs to be a european solution that brings down energy prices so you can see the tension building, but the fundamental issue is that we talk about a complex global market, but at the same time, there isn't a unified european energy market. this needs to bring in 27 different countries that do not share the same vision, and that is fundamentally always a reason when conversations like this drag on for weeks, months, but ultimately, usually, the end with a deal. >> is anyone talking in washington, d.c. ongoing about curtailing exports to europe of natural gas. there is a discussion that prices are surging, and they fell off red now they are rising again in the face of the weather. what is the talking d.c.. >> there is a potential that the u.s. could do this to make sure they are shoring up there

supplies for consumers, but the issue is when you look at the dynamic, what you do is increase the prices overall on the global market. that is where everything is traded, so i could backfire. at the moment, you have a potential that people bring up, but it would be a huge move, and the united states is just nowhere near that yet. also, it would not look great for the administration. they are trying to make sure that they are holding this alliance firm, especially as we go into the winter months, and what you see vladimir putin doing today is another day of a barrage of missiles, and this is on key infrastructure, so really trying to starve those people of power, of water. electricity. they can heat their homes. but at the moment, i just don't think there is an appetite for that. >> on that war, a few days ago, we were waiting to see if we got a decision on the new defense center from the united states.

where are we on that decision? >> we have huge bipartisan support with the passing of the defense spending bill last night in the senate. that will send money not just to the ukraine but also taiwan. 850 $8 billion and of course, it will be all about the staff cap funding, so the government can continue operating to avoid a shutdown, but when it comes to a patriot missile, we are coming to an announcement. reporting has been that president biden has yet to's sign off on this, but we are moving, but we went through this. there's a lot of question about this. will it be the newest grade, or will it be a newer version where people get trained on that. this is something that president zelenskyy has really been pushing for, especially when yesterday, the top ukrainian official was talking about how they think boudin can make a play for kyiv, and do that with

a thousand troops in belarus, and on monday, they will be building in minsk. >> quickly, we know what they want. a missile defense system. can you tell us why they are reluctant to provide it? why they are hesitant to do so? >> there's been a lot of hesitation with weaponry. even with patriot missile's, for the russian foreign minister, they view this as an escalation of the war. the united states basically is joining. they want to contain this. they didn't want to escalated further. >> thank. don't worry. get your thoughts on the world cup. on tv and radio. is that the decision? everything will be revealed. we don't do it like this. everything will be revealed with good arguments. >> she speaking in front of us. >> i thought she was giving it away. were speaking france, but it's not clear who.

ask there are good arguments, but they did by hand anyways. coming up in 60 miss. i want to draw your attention to the story. forgive me if i am announcing this wrong, but this french firm has pause work on all crypto clients globally according to crypto exchange which was a customer auditing firm. that firm is indicated that they will temporarily pause their work with all of the crypto clients, which include crypto.com and binance. they go on to say that unfortunately this means we will not be able to work for the moment. that is according to a spokesperson for binance. in email statement, with bloomberg news, little bit earlier today,. >> i don't want to extrapolate. however, there is a sense of concern that is growing with some of the big crypto clients. how they deal with the lack of clarity around things like proof of reserves and things like the

streams of finance and things that really hit ftx hard. those that have auditing firms could rely on credibility. if you have a major finance or auditing firm pull away, what does that mean in terms of potential consequences? they embrace additional transparency and they are looking into how best to provide those details in the coming months. additional details will be shared with you. >> coming up on central banks, 50 basis point hikes from the federal reserve. 50 from the bank of england. 50 from the ecb. they say they are going to do a whole lot more. live from new york, this is bloomberg.

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>> closing out the week on a low one. we are lower by 1% on the s&p 500. the futures are negative by 7/10 of 1%. adding to the losses over the last couple days, wednesday, thursday, and the bond market, to tens and thursdays. the two-year actually hasn't done a lot. over the past few days, it's around 420 five on a two-year. on a 10 year, bleeding just a little bit by five basis points. you want to see a move.

look at europe. wow. yesterday, we had a monster move in italy by 30 basis points, and we are up another 20 on a 10 year to or. the 10 year is up 10 or 11 basis points. more to come. we are of 20 basis points just yesterday. that is the biggest move going back to 2008. how much further can they go before something breaks. we pointed this out, and we go back to that. the impossibility of a central bank ever moving above zero. here we are. going further and further, and nothing is broken. people are thinking, we may not have a soft landing. is that possible? >> i don't think it is breaking, but when you look at italy, is that a problem? is it a problem at five 50? >> we will find out when it is a

liquidity issue because it has not become the same kind of look to the issue, trying to raise money because they don't have to. >> and hasn't started yet. what do you make of what we heard on the range? without a doubt, hawkish, pushing back against a terminal rate it if you think that is the last hike, they are going to go again. they might go again after that. on qt, was that qt from the ccb next year? >> it is pretty minimal, the amount they are rattling off. and they have an emergency purchasing program from the pandemic rid that will continue to make reinvestment through 2024, giving them leeway, potentially, to offset these pressures in the periphery. yields are absolutely flying. christine lagarde is sending a warning to the market. it is time to adjust it >> more needs to be done. as a result, new market

expectations will hopefully be embedded in future projections, which indicate that we can reach the 2% inflation target. >> more work needs to be done. being joined now, from than denver, is president lagarde as hockett said was yesterday? >> that took us a little by surprise. we can see evidence that the economy is in recession. that there is probably not an immediate demand-side element to this inflation. there are wages in the u.s., or the u.k.. the danger is that the central bank starts to go a little too r. the policy work, with all of the central banks reacting to inflation. they may now be repeating the opposite mistake because reacting too late to the science of disinflation. >> do you think something could break have been the pace of

these recent moves? >> it depends how you define break that's what gives you the inflation. we would like to think that central banks can find tune, but it can. they are clumsy institutions. there is not a major drop in gdp for for 5% or major rise, so what we are going to get from the economy and the u.k., probably the u.s. as well is a percentage point drop depending on the economy, and a bit of a rise in employment, but that is based on the fact that central banks don't go more than they already have, but when you keep going, you find tolerance levels for everything. you start to crack. you price loans with interest rates. >> i'm surprised that the

projections i solve not only from the ecb but from the federal reserve. we are acing expectations for year end inflation and for 2024. the expectation rises more than previously thought. it is not sticky or on the demand-side. >> it could be that we have a structural break, and this is the reason in the reason we view inflation. for 12 years after the financial crisis, in the early to thousand's, we were thinking about this little proud problem. -- low bound problem. in that kind of world, you are prone to react strongly to downside risks, especially in disinflation, but just take your time and react to any upside. we are in a world where you increasingly here from the

inflation rates higher. we should overreact to scientific inflation, but with the disinflation, we are observing a first shift that comes with inflationary environments. >> into next year, a lot of our audience of her the same thing over the last three months. they're looking at a 2023. if you get to a recession, don't worry about it. it will be sure. it will be shallow. that is on the depth and duration. no big concern. we heard that again in the statement. i will show you the line that reads as follows. on the latest system staff projection, the recession would be short-lived, and shallow. given the projections, given the pushback, given where the economy already is, how on earth can we keep sitting here saying

it will be short-lived. >> i think the projection is a bit too optimistic. i think the fed is as well. it starts to sound a bit realistic, and may be too pessimistic for next year. the reason why you have a base case, and assume this is going to be a short-lived recession, because simply, we are not ready for a recession across the western world. we had two years of recovery, but during those years, we barely got back to our free covid levels of gdp. we didn't significantly overleveraged the household or the corporate side. bain capital is high. we don't have piles of excess capital or inventory or economy hanging around. we didn't have housing bubbles where we built too much across europe and the u.s., so when you don't have those signs, typically, it comes due to an exogenous shock.

typically it last as long as a shock last, and once it fades, the economy covers. that is different from the business cycle where you need to go through this cleansing phase. the problem is if we tighten financial conditions into the exhaustion is shock, what we are doing is putting the economy and an additional pressure, that is where the downside risk comes. the bank of england probably gets 25 basis points. that is it. the euro zone is 3.5. the fed gets 5.5. that airs on the safe side, in my view. if you go beyond that, you start to worry about things a little bit more in terms of the profile of the recession. >> to take this further, everything you said goes into account elation about how deep this recession might be, and i hear you. without access, we come to a shallowness. there is a central bank telling you they will take demand down.

they will keep the that on the depth side, there is a strong consensus of shallow, but on a short-lived intimate, there is a real risk that we have below trend growth for quite a. of time once it starts to kick in. >> this below trend growth or slow recovery from a shallow recession is possible. what i don't think we need to worry about is this kind of health shaped shock we are often warned about. what i notice is the model's lack one thing, and might include imagination. we always have a backward looking approach to forecasting the future which means when we are missing a key element from our historical model, in this case, 5% less energy in the world because you have a supply related issue due to the invasion of ukraine, how can i

replace that. it is 5% bigger or how can we not reverse that. or, we don't factor in our models, how does it become more energy-efficient through the price mechanism. with the profit signals, in the end, we adapt. we have a hundred years of economic history, reacting to shocks. the price messing work things out, and the economy rebounds. my bet would be that the animal spirits are the bearishness that makes us think about this in the context, but once we start to see the movement towards recover meant by some next year, late next year in the u.s., we start to feel optimistic, and we can easily imagine a world where we get something stronger during the recovery phase. next fall. . thank you as always. looking ahead to 2023 and the consensus that we could get it down here, it will be short and shallow. >> a lot of people are pushing

back, and i spoke with howard marks yesterday. it was fascinating. he lived through three see changes in the career, and we are headed towards a new era of higher interest rates, and suddenly, we are not having a tailwind of all interest rates. one of the consequences is that it speaks to potentially, this is an extrapolation, more pain out there. a different risk and reward calculus, and we -- how do we understand what is going to happen in order to understand where we are, we cannot agree even on that. is china reopening inflationary or deflationary. >> you tell me. bridgewater said it is inflationary. it is a worst-case scenario. it will actually be increasing demand. you get five people in a room with five different opinions. >> is not always the way. x is more like that read we have bifurcation between things that

are dramatic. we are heading back to a low rate and low inflation regime. >> a pre-pandemic playbook. >> how do we get there? >> without a doubt. next i don't see the evidence with >> when you have 10 years of conditioning, take a lot to shake it off. >> that is the pushoff, but people just want to gravitate back towards what works and reward them so over 10 years, and they are asking whether it will, going into 2023. >> i will point do we capitulate into that view? >> if there is some sort of slowdown in growth, do they think this is it, going in, to get slammed after? >> no baseball caps or hoodies. back in the bank. >> unless you are in citigroup you take the rock. max you can go anywhere in the city for two weeks. anywhere you like. >> can you interview people? i love that. >> that's very english.

christmas starts in december. in the years over. >> don't you feeling that is the mood, generally. >> totally. you need to take a leaf out of the book. it's year over. shut it down. >> i'm just saying. shut it down. from new york, this is bloomberg. >> keeping you up to date with the first word news. top democrats say that president biden should run for reelection. in an interview with cnn, the house speaker says biden has been a great president. the senate majority leader says he would support biden all the way. bakke comes as some democrats are urged to look towards unum -- a young generation of leaders. an 80-year-old with the oldest resident to hold office. members of the european union have reached a deal on a ninth package of state -- sanctions. they targeted access to drones, with more banks and official said to be responsible for

kidnapping children. there are restrictions and chemicals for military purposes. in the consumer confidence, with an eight-month lingering at a record low. that is according to a survey. the results showed the results of a rising price and the impact the prices are having on you castles. workers at 50 starbucks locations are starting a three-day strike. they say the company is not bargaining fairly with stores that have unionized. the group called it workers united and it prevailed over several sources here. the company says it has not engaged in antiunion act of any. global news, 24 hours a day, on bloomberg quicktake, i am lisa mateo. this is bloomberg.

>> what happens when china, the

largest consumer in the world, the largest importer in the world begins to rebalance significantly in the first part of next year? it will tighten the markets tremendously and put a lot of upward pressure on prices. >> goldman sachs is looking for triple digit crude on the back end of next year, and it's all about the cap. if you are looking for rebound, and is commodity market, you are not getting one. >> the super cycle is honestly wrong. china is trying to hold it up. it is certainly not 58, but it is not alone looking for treasure -- triple digit crude. the cisco to what we are talking about over at bridgewater. the man popping back in and going back up? we are going to be complete

leonidas. makes sense. over at energy aspects are saying the same thing, and it is basically a ghost town in beijing as a result of everyone being sick and staying home. but when that changes, and it will change. all of a sudden you will have a different economic act dropped with an increase in demand. we didn't get that. there will be a lumpy point, but there will be waves of demand starting to go back in. >> i would argue it will less bumpy if you let it go. >> in the near term, you know works. we self regulate, even if the government doesn't self regulate. we are already seeing that, with a company volume down off of this reopening in china. statistics around that story and

affects. i want to give you price action right now. equities are lower and negative. 1% and down. just a little bit in the united states. we will touch on that later. on the 10 year, 349. we have talked about crude with the euro-dollar. 10630 five. almost completely unchanged. joining us now is the deputy director for energy security at the atlantic castle mobile energy center. i want to start with you on a story we have talked about. 40 mins ago, it was a price cap in europe, we are looking at a case study. what are the lessons you've learned from the experiment where we are capping prices through the year? >> hungry has had a gasoline price cap, and it is important to take a look at what has happened, and what the price cap has led to, and basically, long story short, it led to a

shortage of gasoline on the market, so i think we need to take that and apply that to a price cap when we talk about natural gas. as you see, across europe, we are trying to figure out what that ceiling price cap is, with the original 275 proposal criticized because initially, it will not distort the market significantly, and it is a good thing because you are trying to attract more specific supply crises, but right now, the country is saying it is too high and we need to ways to alleviate pressure on a consumer or industry, but there are other ways to do that. price caps is one of them, and the risk is that it could divert shipments to a more lucrative market or discourage efficiency measures and conservation. >> the fact you have european leaders coming together to

negotiate something that could not just dampen demand but increased demand and exacerbate the demand totally, is there no solution plausible to refill our coffers ahead of europe? >> i think it showcases there is not an easy solution that's going to fix this chronic supply crunch, and frankly, this started before the horrible war kicked off, and this started last year around this time. chronic underinvestment led to this partially, and to the extreme, truly, it is exacerbating things in your. it also showcased a pressure that european leaders are under to provide some source of answers or solutions as you are right. there is uncertainty around this, but also, not just with the winter crisis. this is really worrisome because there are no information about

how much gas we will be able to get from ukraine or russia or tear. you also mentioned in earlier stories, and increased demand in china, and in asia. the reason it is so high is because a lot of those chinese shipments, which i've learned from europe, with listening up, we can't anticipate the same scenario, so next winter is worrisome, and it will be a combination of this -- restrictive measures and investments in the energy on the fossil site as well as on the google site. this is sensitive. there has been a discussion about trying to lock in that discussion as we try to plan for a different kind of dependence. different alliances. how does this controversy with the potential for bribery, around giving certain perks of fact discussions to better

produce. >> energy and geopolitics in all of these other events are so closely tied together, and we cannot put these kinds of conflicts or nonvirtual things, you are not in a position where you are going to see you are switching from one supplier to another, but the name of the game is diversification. there is as many different options as possible because if one of the players can go somewhere else, you can get advice. >> eve touched on the heart of this issue. is not this winter. it is next winter. given what you know, could you give us your best effort to describe what you think next winter is going to look like when it comes to energy in europe?

>> i think it will depend on several factors. how robustly and quick is the asian demand going to roll back. i think it will also depend on if there are additional attacks on critical energy infrastructures across europe is that will take out supplies, as an example in norway for infrastructure. if there is anything that happens to them, it will be a huge amount of supply dear. off the market, there are cold snaps this winter, so how does this winter impact next winter. it is all about how the storage level skill low in the spring because the storage levels are forced to backfill for the next winter to get around that to get filled up, so all of these catch up, and how well europe does with the efficiency measure without destroying the industry, without hurting the households, it kind of factors into things.

>> it is complex, but i'm asking for the best guess based on the last six months. it is a realist -- realistic expectation to go into next winter with storage levels where they were coming into this winter without nord stream and without policies that really curtail demand. >> i will give you my take. i have put out an assessment that there will be intentionally a bcm shortage. i actually think that is on the more optimistic side because i think there is a lot of things that could happen then because with a model of lower storage, i think the 30 bcm could be switched out into or your 50. that assessment result could also assume that the carryover on the industry destruction, the industry to continue working,

and we don't want to carry that over into next year. you won the economy to continue growing. so, if we translate that over again, that is not the end goal. i would say on the brighter side, let's take a hiatus. i am not feeling as optimistic. there is a lot of room for additional shortages. >> a lot of people share that view. thank you. thank you. it is very difficult to make a call for 12 months from now. think about the calls we are making from 12 months ago. and how wrong they have been. we are kicking off in your. an energy crisis, and we can get through the winter. so far so good, but next winter, we are not looking great. axes even more difficult when it is hard to understand what is going on right now. not only on the ground, but supply and demand dynamics. just general policy. >> listing the variables that come into a calculation like that. he goes on and on. from hancock on we are looking forward to that.

equity futures are down by about 1%. live from your city, with lisa abramowicz, i am jonathan ferro it -- this is bloomberg. from one company committed to building a world that works, to three that will focus on a future that does too. this is ge healthcare, creating a world where healthcare has no limits. this is ge vernova, helping generate and move the energy that our world needs. this is ge aerospace, advancing flight for future generations. this is the next generation of ge.

>> inflation has turned. but there is evidence that it is sticky. >> we are transitioning to an environment where central banks are divided. how do you wrestle with inflation rates. >> the ecb is all about real rates. >> interest rates are too low for too long. >> in some respect, the fed has been dealt a better hand than

the ecb. >> this is bloomberg surveillance with tom keene, jonathan ferro and lisa abramowicz. >> we are so done with 2022. tk is not showing up for work. good on him, because i agree. from new york, good morning. for our audience, with lisa abramowicz, i'm jonathan ferro. futures are down by 1% on the s&p 500. it has been a week full of central bank speak. >> as knock on the way we thought. >> cpi as we got, means that suddenly you will get relief, and you are ok now, and you can consider whether we have to do much more, that is not what we got. >> what did we get? a disconnect with equities. equities are lower. yield is. that's a break. i wonder if that is setting a stage for what we might see. >> bonds are not buying. if you believe the bond market is the smarter market for more accurate markets, then quickset

enough we are going to see any edge. this is positioning, and it is a huge disconnect from europe where there is a respect. >> is that the recession traits trying to kick in. just a little bit of a recession traits started to kick in? >> it is starting to kick into the bond market, but it is an increasing number of people coming onto the show saying this is the more likely outcome as we see resilience in that year. so far, companies are doing ok. they are hiring. you are not seeing layoffs. >> they are saying that profits will be good. it will be better next year. >> for hearing that across the board. american airlines actually increases a threshold or miles. i've a feeling you are familiar with this. you get certain perks, and i was looking at that. you don't do that unless you have pricing power. unless you have an upper hand over your clients. next we spent time. can we talk about 2022. i think where we are is really

increasingly difficult to understand. retail sales yesterday are down almost 11 months. a slow down. 45 ms. later, you have a production for the first time since june. slow down all ok, you look at the jobless claims around 200 k. it is hard to make the argument that we are seeing a labor market adjustment that the fed chair would like to see based on jobless claims in and run 200 k. >> how do understand retail sales outlook like goods with eight disinflationary force, but doesn't include services that we see jobs for your company's hoarding labor because they just had an experience where they hire people likely, they still see demand going up. it is a complicated moment added to the back drop of oil and energy prices. there is a feeling of ease, and a very difficult picture going into 2023. >> good morning. we want to wait for the price action. on the s&p 500, we are lower.

the future is negative on the nasdaq. in the bond market the yield is higher. up by five basis points on a 10 year. i can tell you a lot more in europe on a 10 year in italy. another 18 basis points after moving 30 yesterday. in germany, we are sharing the curve it the two is out to 10 in germany. this is the move today. another 11. you can call at 12 basis points on the two-year rent on the 10 year, it is up another 10 or 11 basis points. we have seen a really big sendoff. >> christine lagarde is more direct than what we heard. just a little bit more. maybe she is like stop it. we are not going to do. how many languages do we have to do this. perhaps, there will be more direction, that is where i am curious. >> more fed speak. >> i'm done. let's talk about what it is.

the new york federal reserve is joining us along with kathleen hays. the fed president at noon, and our own michael mckee will be having a conversation with the fed president at 3:30 p.m.. look forward to the pushback because that is what i am expecting we will see. the latest slew of data is coming out, and is the only data were getting significance. u.s. manufacturing and services for december. you get a six state month of deceleration in terms of the activity here. on sunday, it is the world cup. it is when everyone wants to get to it they can be done with the week. france versus argentina. hoosier favorite. >> i'm not making a call and this. i'm not trade on not participating. i'm a journalist without bias. next month. >> everyone believes that. >> that's right. you have no interest whatsoever. coming up, from doha. looking forward to that conversation, and in the next segment, ama bringing a critical

analysis of how things will play out on sunday, and not holding back over we think will go home with a trophy. joining us is a chief investment strategist. fantastic to catch up with you. it always is that i want to catch up on a thing you are drilling down on. the bond performance, you picked up on this. what is it telling you. >> is pretty refreshing to see diversification is working again. stocks are down on the week, and bonds are up on the wii, and that is the type of reaction that makes sense. they have almost been in a state of comfortably numb, given the fact that central banks are implementing the tightening that we've seen this generation. we are seeing it suggest that a global recession is likely. the yield curve is finally averting to a tune of 78 basis points, and earnings are starting to come off those are things to us that suggest that a recession is likely, we have seen cyclical areas of the market showing leadership.

we have seen european equities having their best quarter, one of their best quarters and years. a lot of that process things are working as well as they should. >> with this goes against the idea that we should have a different playbook. this is what we've been talking about for a number of weeks. we are not necessarily going to see a pre-pandemic investment thesis where something goes wrong, central banks lower rates, and that fuels a risk rally. doesn't make sense to you that the stocks and bonds are reverting back to something that has been traditional and a time when nothing about this moment is traditional? ask we think the playbook is -- you have to rely on his three year. we do think that given the fact that the economy is coming back, we will be cutting in the back

half of next year, so we want to be position for that. we want to lean into bonds. we like the idea that bonds our work in a portfolio, and you know that they are talking a lot about income being very attractive and competitive versus other parts of the market, so we think that the playbook comes through again to next year, but it will take some time. it has been incredible and dogmatic infighting inflation. we have heard time and time again, but we know the fed is looking at lagging economic data, employment, inflation, especially service inflation. many of your guests have talked about it being very sticky, and it will probably be too late for the fed to reverse course quickly into next year. it will cost an economic slowdown, they will have to cut. ask this is something that has been talked about. really, it is pointed out that there is a feeling that if there is a playbook, is going into big tech will assume semi people are

doing that, they pushback saying it is not necessarily what is prudent. where do feel on the leadership, which are the stocks that can continue to drive upward some of the equity performance at a time when we are reverting back to a playbook that is familiar? would it be that the playbook from a cross asset perspective within equities is a little different. it is always a look to grow stocks or produce organic growth in a slowing backdrop, and now we are not seeing that. there is growth and technology that is large we thing about the stocks we bought on online shopping or laptops for the kids. growth in demand is all new, and we are seeing a. in which the baton is being handed over to the economy. we look at the value side of the house, and is showing resilience, so we want to grow

in growth with value. health care with one of the high quality balance sheets and cash on the balance sheets, organic growth drivers, but we also like a classic s&p 500 company. one that has a lot of cash. we don't want companies that have to tap a capital market in order to go. we don't want on profitable technology companies. but still, there are some carefully selected complexes that make sense. >> one thing you said is that for the most part, equities are not acting like a recession is coming. where would you look that and where do you think we are further in the adjustment process, relative to the other parts of this market? ask it is so amazing to see this re-rating and stocks from the beginning of the quarter. the s&p 500 is starting with forward earnings, we are trading at 17.5, which means it is more

expensive, so we see a re-rating, especially in a more sit -- cyclical sector of the market. energy stocks are doing better, and the oil prices are coming down. it is a notable dynamic. we are looking to find areas that are already priced for a recession. there are not many. we have used an analogy that if there is an analogy -- and equity store and a down store, the equity store will not have much on sale. it is a mid-cap value stock with a steep trading discount, and into thousand eight or 2009 levels, the income store is where you have a lot of bargains. there is a big price declined from 08 or 09 levels. the income there with the total return potential, so the bond store over the equity store in this holiday shopping. >> when were a kid and your parents would say you can't get anything from there. that's what you wanted to show.

they are expensive. >> you have to get that. you need a coat. that is what they are telling me. stocks and bonds. who wants to shop there. >> was the most disappointing gift you've ever gotten. >> i didn't like close. i was very against close. i don't mind turning around and saying in 20 years time, this is all you want. tilda swinton nice close. you want more toys. but i am not, you know. >> i'm not 13. i want close. god bless her. >> please. if you are listening, no close. i'm done with close. although the other day, i thought i would love a toy car. just a remote control one. i would love that. i'm thinking about buying one. >> you're not serious. >> something about buying one for the apartment. i would like a toy for ari. a car with the remote control. >> a little set. >> my was a kid and i had a toy car, i had a cable attached to

that. >> i would follow it because it wasn't remote control. i want a proper one. a fast one. quick so got to central park and play with it. thank you. have a wonderful christmas. >> at -- equity futures are down 1%. this is bloomberg. >> keeping you up-to-date with first word. i am lisa mateo. russia has launched another large-scale missile attack on ukraine. several cities have been hit including the capital. widespread power outages have been to. the attack comes a day after a top ukrainian army commander warned that there is no doubt russian forces will try to seize as soon as next month. the russian assault fail. invasion, rapidly spreading outbreak has turned the capitol capital into a virtual ghost town. that underscores the cost of the president sudden pivot away from covid zero. anecdotal evidence suggests that

entire families and offices in beijing have become infected in the span of just days. that could be a preview of what china faces. >> boeing's closing on an order for as many as 200 of at 737 jets from their new owner. bloomberg learned that the two sides are trying to wrap up talks before the holidays. they are working on rebuilding the former state-run airline. 50 starbucks locations are starting a three-day strike. they say the company is not bargaining fairly with stores that have unionized. the labor group called it workers united and has prevailed in about 270 starbucks stores this year. the company says it has not engaged in antiunion activity. global news on bloomberg quicktake. i am lisa mateo. this is bloomberg.

>> the central banks have kept interest rates too low for too long.

it is policy rich with no restrictions with no substitute for that. >> john writing with a really important point from the capital chief economic advisor. it was stopped in tracks when time cannot substitute for that. he does not think rates are restrict it, and i think the praise of the week is sufficiently restrictive. we have heard that from the ecb. you've heard that from chairman powell. in this news conference, some people think these terminal rates we are looking at, the federal reserve, they are unachievable. he said, they are projecting something that is not restrictive enough. first of all, it is sufficiently restrictive, and it can mean when everyone. of course, they come up with a phrase that they can kinda fit into a box that can mean anything. with respect to anything -- to his point, it is a salient one. even if they don't raise rates, or hold it for a year, that will be more restrictive because as you point out, economic activity goes down, and it's not policy. definition coming is tighter.

that is the key question. doesn't make a difference? indeed, it will roll over in the way that people expect. i think the question came from bob michele. he said that the recent disinflation is transition. really, it is not a subtle improvement. when it comes to eurozone inflation, we still got double digit cpi. and there was a moment where she did a calm parent contrast where she basically said we are not the fed. we have so much more work to do here, and i thought that was interesting. >> i would argue that inflation is transitory. with the underlying component,, it is not a clear disinflation for a long time. >> in europe, there is a

eurozone with european economies. they have a war on the doorstep. russian missiles are knocking it out across you can't -- ukraine prayer let's get there in brussels. can you give us an update on what's been taking place over the last couple of days? >>. this is now a drone war, and we are talking about the changing nature and the war in ukraine, and it is very hard on the ground. we are seeing russia suffer losses and it is retreated in beginning to target critical infrastructure and energy infrastructure. the whole hope is that at one point, it will be the ukrainian people minus temperatures that will ask for a compromise. before the time being, that is not happened, and every ukrainian official i've spoken with behind the scenes says the country has never been more united in this fight it the other issue is of course that ukraine is asking for both more more air defenses, long-range weapons, and we know it is

scary, and they are worried about confrontation on russian soil, and yesterday, and i know from a good source that the president asked europeans to provide tanks, and he said at this point, there is no rational reason not invite tanks. ukrainian leadership is tired of this debate of offensive and defensive weapons, but as you know, there is a debate before it can become belligerent. >> materially, how much more could ago given the ongoing turmoil of the war and the sense of commitment by europe to keep the resolution? >> this is so much more money than the biden administration had asked for, and this is likely why you are also seeing a lot of public and leaders in the senate willing to go with a spending budget for the whole year. they have a lot of what they want on the defense budget, so

there are millions of dollars of funding in the ukraine, and more money going to taiwan. there is also a lot of question about risk for the u.s.. in terms of what happens when you say there is a defendant saying they have to go to allies to help itself, though the supply chain is speeding up things important because they have to lower the stock because they are sending things over to ukraine. the focus is on whether or not we are going to get an announcement and if president biden is going to sign off on sending those patriot missile see ukraine. that is something that the president wants to see and has been asking for prayer they have hinted it is coming. >> when we talk about european unity, there are oil prices and gas prices, but how to do it remains in question. very hot kiss message says that -- and very hawkish message says they will have to jack up costs.

>> every time after european central bank decisions, i look at the juror -- german press and the italian press. it is what we do on friday morning to see how the decision went down, and it tells you everything you need to know. on the italian press, there are some words in italian that i cannot say on international television, but this is not gone well. the message is that the hawks are in control. it is completely on the side of a very difficult situation, and the senior ministers, tying ministers, they are openly criticizing a decision. the language on twitter with what they finally tell you a lot. in brussels, when the meeting was over, they decided they would leave, they would not take questions. that tells you a lot about the room and the temperature after the decision yesterday. >> italians also are deeply unhappy that france is the world cup final.

the italians are not there. >> what gives you something about that? >> i'm a supporter of the team. >> how do you feel about that? perhaps you share that sentiment. maybe we'll tune in on sunday for the second half. >> all go to church first thing. >> are going to do that? >> really? are you going to check the scores? >> clearly. this is your moment. world cup winner sunday. who is it? >> look, everyone has been asked this question, but before we get to that, i will say two things. when you get to a final, it is congratulations to both teams. this is the olympus of football, and it should be proud. the french, they have a 23-year-old who is going to be a star. the other point i want to say is football, what a game. it brings everyone together. a beautiful game, but if you asked me who is my team, i am spanish. latin america is in our hearts. this is a relationship going

back centuries. soak my world cup winner is obviously argentina. go win on sunday. >> that's not about the passion noble thing. >> it's a form of the analysis. >> that's opposed to the heart with the italian team. >> it always is. >> final word. he goes to. >> i also have a personal connection i can go through, and i a french grandmother, and it would be very upsetting if i wasn't rooting for the french. obviously, the americans are first. i'm an american citizen, but they also have a track record. they are the reigning champs. i love seeing them play. >> there is an actual analysis. >> i think this is about the legacy of the past, and it still is the current, and the future. it is messy versus the passing

of the torch, and that is a fascinating matchup, and the defense of how that plays out. >> that was beautiful promotion. >> even watching. >> is been fun. >> fifa is about to screw it and change the format of the next world cup. they want to introduce more teams. >> don't get me started. >> they want to change the format. maybe groups of three and not groups of four. there is probably not going to be a good idea, and probably two halves with a load of hoops and a little groups on the other half. >> people hate fifa. why do they do that? reload of reasons this seems like an unsuccessful world cup, and from the drum of the game perspective, it's incredibly successful. from other perspectives it is controversial with a lot of people wondering if it is worth attending. it is not full. >> my unhappy this didn't have

italy there? you are not entitled to a place there. it is fantastic and everyone is engaged in and understands it. what would you change with the format going into 2026? at this point, a lot of people protested the hosting and timing of the world cup, and it didn't seem to make a dent in terms of viewership. understand we all have more as we continue the conversation. coming up, we have some strong thoughts on the german bond market. i am looking forward to that. it is still a cell. that is next.

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>> down and another 1% on the session. here is the price action for you. equity futures down by a little bit more on the s&p 500. futures up by a little more than 1%. negative by 7/10 of 1% that is the story. here is the bond market price action. yield just a little bit higher. let's call it five basis points. let's call at 350 on the 10 year. of remarkably stable over the

last couple of days. even in the face of a vicious selloff in europe. bond up yesterday up again by 11 basis points. the tenure was up 30 basis point yesterday. 4.34% on a 10 year. qt is about to commence. the pushback on rates and the right path, it's firm. on the one hand, note on the other hand that. even going into the tail end of the news conference. >> which is why it is not the biggest selloff. i thought it was really interesting talking about the italian finance minister. >> unhappy. >> not exactly thrilled especially if you are heading into a downturn. just to move into some of the stocks. american airlines, came out and

tightened up their frequent flyer status and the loyalty programs which ballooned so they raised the threshold to come into some of the perks. i thought you would care about this it's done more than 1% but it really is not the only one. there is a host of airlines doing this. if they can do this. >> it's really difficult to get status, you need to fly a lot. the bar is not low compared to something like united where the bar is exceptionally low ticket status. >> they are tightening it up even further. they don't want to lose the revenue and they don't have to. >> there is crowding where? the check in? the chicken at the lounge as they don't like, what is it. >> the free upgrades, the idea of having all of the perks. it's paid more get less. that is with the interpretation is of the airline industry. >> they want to make it more exclusive? >> yeah.

amazon falling after jp morgan cut its rice rate on the stock. part of this has to do with the cloud, aws but part of this has to do with compression and we have seen this across the board. meta is surging, shockingly. jp morgan raised its recommendation on the stock. >> discipline is back. wonder how the tech names are going to adjust to it. you mentioned amazon. >> people have to turn up in suits? >> i'm not saying they have to wear suits. i think defining the last decade of zero rates and zuckerberg got around with a hoodie in those days. those days are over. >> you are seeing that in the layoff numbers. >> can i say, it was great by

the way? power stick to a script after delivering a 50 basis point hike. he went on to say i think this is pushback from the consensus. we expect a modest rise in yields as central banks to livermore hikes. can we start there? what do you think of the people getting into next year? >> i think the price action is not reflective of what we should expect next year. you are getting to year end. people are paring back positions but you are looking at the basis point rate hike the ecb to deliver another hike. there is still going to remain somewhat hawkish for at least the first quarter two the first half of next year. those circumstances, i don't see why yields can't adjust modestly. i think if we get to a certain

percent that is not necessarily out of the realm of reason. i feel like the market is very rich as they stand right now. >> can we talk about the front and as well. how do you think it's going to evolve next or? right now for 25 how are you thinking about that? >> i don't think the front and has a lot of room to rise unless we expect the fed to hike beyond five and a quarter percent but in the long and the dynamics are very different. you can see a lot of corporate dishes coming into the market. typically those tend to at least support a little bit of a bearish. i think there are more yields, more room to rise. i think it could see a push higher at least in the first quarter before we start seeing yieldss in the second half.

>> i completely buy what you are saying so does the federal reserve. this is what the fed is telling the market is going to happen >> i think there is a concern in the u.s.. we have a little bit of a consensus. the u.s., we think that is in early 2024 event. come middle of next year if the unemployment rate is not heading towards 4% and wages are still pretty strong, the fed might have to go beyond 5.25. that is a risk scenario that the market is not fully appreciating. >> what is the base scenario of how long it would take to get back to 2% inflation? >> we have projections from the

fed. the fed doesn't expect inflation to get to 2% in 2025. you are looking at a strong trajectory to inflation being sticky. after the initial descent. once we get to maybe 3% or 3.5% and inflation stays there and it's sticky at that level, at that point the fed is still going to remain somewhat hawkish if the employment asked her remains strong. given the fact that we have such a mismatched labor market between job openings and available employees to fill those jobs. not saying the labor market is going to be as tight as it is this year but it could take a lot longer for the employment fixture to weaken from here on. >> emily berlin was speaking earlier about a fixed income shop and the stock shot. the fixed income shop has a lot of great things in it because of

how much it has been sold off. not necessarily the credit side of things, given your projection that we might not get back down to 2% by 2025, does that default rate kind of expectation? does it have to rise subject -- substantially from where we are right now? >> they don't think the default rates rise the cycle. i think we are in a different environment relative to 2008 timeframe, the great financial crisis. i think companies are in a good spot. one metric we look at for recession is corporate profit origins. so for the most part, under the circumstances it's really hard to envision a scenario where the default rates are going to rise meaningfully from here on. i think the corporate sector, if we get a lot of supply next year we are expecting a decent amount of demand. the yield you get for holding u.s. bonds is quite substantial

relative to yields in other regions. i think it's going to be a bond of next your and it's going to be for yields in return. >> what pivot, this was the title the jumbo rate are over but we are far away from a money policy pivot. where do you see terminal rates? it's a headline for a lot of people. or is the terminal rate? is it basically in line for what is priced right now? >> for the fed, i think the market and the fed are well aligned. i think the market expects may be around five, 5.25%. a be it's a little underpriced right now for next year but not by a lot. for the ecb i think that is still a lot more room for market pricing to rise higher. however economists in europe not expect the ecb to reach rates to 3.75%.

i don't think that's fully priced into, into the european bond market. so we see more potential for the treasury bond spread to narrow. we put out our outlook, we have the bond spread around 175 we were calling for it to come around 115. we are already 130 and we still see more room for the treasury bond spread to narrow. so i think it's quite, give no, hawkish for the ecb. >> i just never, ever thought they'd go this far. no way. not even nine or six months ago. thank you, wonderful summary of the last week or so. always instructive to have a look at which wars are fighting right now. there is a low chance of rate hikes returning to 75 basis points.

that is the fight they are having. they are basically trying to say number 75's but i guess we have to live with 50's. that is where the ecb is at. >> if you want to put it this way, everyone is a hawk. fighting some of the biggest rate hikes you have seen in history. when you say you never thought we'd get here remember all the things people were saying? how much confidence to central bankers get from the fact that you do not see the default cycle? europe, there is a question perhaps a little bit more especially with companies having issued debt at negative yields effectively with that looks like what they have to refinance. >> you have to remember mario never hiked interest rates at eight years of the ecb so it wasn't unusual to make the call basically after what we have seen over the last decade. it seemed kind of logical.

and inflation came, came through hard and the ecb had to switch quickly. >> this goes back to what i was talking about when he was saying it's a sea change. this is a new environment which raises an issue with the idea that people have we are going back to the playbook that worked last year, two years ago, three years ago. we are cutting rates, that was the response is that still the response if the poison is inflation not disinflation? >> talking about the poison, goldman sachs according to them set to lay off as many as 4000 people as a cost of this ambitious push takes a toll. we will pick up on the details of that story for you in just a moment. from new york, this is bloomberg. ♪

members of the european union have reached a deal on a ninth package of sanctions on russia. they target moscow's access to drones, more banks and officials set to be responsible for kidnapping children from ukraine. there are also expert restrictions on exports and technologies. in peru, more nationwide protests sparked by political turmoil a judge has ordered the former president remain in custody for 18 months. he is charged with alleged crimes against the state. demonstrators demanded his release and presidential

elections. private equity firm advent international and weather forecaster is bought for $4 million. stocks more than doubled including the transaction is worth for .4 billion. amazon signed a deal with games workshop to develop movie and tv productions starting with warhammer. the warhammer is a sci-fi universe focusing on themes of conflict and galaxy spending -- spanning empire. global news 24 hours a day on air and on bloomberg quicktake. powered by more than 2700 journalists and analysts in over 120 countries. lisa mateo. this is bloomberg.

>> falling rapidly.

there is a risk heading that way particularly because the labor market and the labor supply is high and that's i we have seen the risk is pronounced. >> governor bailey looking ahead to 2023 to do more. don't about 1% on the s&p 500 witnessed yesterday bleeds through into friday. we are down across the board. the bond market yield is high. let's get to goldman and a look at the stock right now. i'm going to show this reporting from them with you and read it verbatim. goldman sachs plans to lay off as many as 4000 employees as it struggles to meet profitability targets and according to people familiar with the matter. it goes on to read managers across the from have been asked to identify low performers for what could be a cut of up to

pick a percent of its workforce early next year. i have to say, when i first so that number i thought they accidentally put an extra zero because earlier this week our on reporting indicated they were looking to lay off may be up to 400 people. that's pretty dramatic stuff. >> you are talking a percent of the staff this is a significant they off. it comes around david solomon's quest for perfect -- profitability. people short of that goal. the targeting of the market unit is one of the big questions that we have yet to understand. how much is this going to be isolated there especially in light of some of the slowdown we have seen in capital markets activity. >> it goes on to read in a typical year some employees are laid off, zero bonus. other firms on wall street,

goldman skipped that in 20 because the pandemic need them and sensitive and 21 one been profits made them unnecessary. when we look at big tech right now and the financials how much of this is just kind of like the phrase payback, is that what we are making up for? >> that's what we saw at morgan stanley because morgan stanley have reports about cutting some of the staff and it was bigger than expected but it was just a fraction of a number of employees. so to your point, this is the reason why some of the layoffs we are hearing about may not be indicative of a wholesale in the employment market but areas that got overstaffed during the pandemic. >> we are trying to get our correspondent on the phone right now. the world cup final in just a couple of days, argentina said

-- argentina versus france. he joins us right now outside the stadium. walk me through how big the next 48 hours is going to be. >> it's going to be monster. it's going to be monster. i never understand what $45 billion looks like. that is at capacity of 88,000. argentina is adding two extra flights to get people here. i am not in the four seasons, let me add that i play in the center. it's a pretty cool atmosphere, i have to say. they have given me a ball to play with. this is rocha. >> is that a regular size ball? it looks a little smaller than previous. >> we spent 60 riyals on this.

we couldn't afford the big ball. >> i'm curious what the reception has been like when it comes to whether this was a success or not. what is your view? >> i think if you judge it by dollar spent, viewers, numbers, the most-watched game and at the united states of america for soccer is football. for football in the u.s., the most-watched soccer game ever. has it been a ramping velocity success for fifa? yes. that's what they've earned over this 2022 world cup. dollars spent yes reputation that is a whole other bandwidth. you can look at it from your side of the pond which is about lgbtq rights, labor workers rights, you can look at it from my prism from where i am.

they were hugging one in our -- one another. it depends which prism you look at. >> can i just say, someone get a ticket for final spread he doesn't have a ticket for final. good to see you buddy. >> this is the worst expenses trip i've ever been on. >> i think he was pretty upfront about complaining there wasn't he? >> that's ok. >> has it been successful? i think a lot of people must say yes. the football has been successful. >> the amount of money they have taken inverses spent not as much. with respect to whether it actually got a rep to reputation globally not sure that can be complacent there. >> goldman sachs planning to lay

off up to 4000 people. shelley jumped on the phone for us i assume you read through the story is what what did you make of the headlines? >> 8% is what this would amount to according, remember to put this into comparison morgan stanley's percentage cut was about 2%. i would say goldman has expanded pretty drastically over hiring the last couple of years. he hinted that pruning would happen. just put the number on how the printing goes, thousands, not hundreds. this will go into early next year. in addition to the cuts we have already seen if goldman is doing this you have to assume that other people are already also starting to think about whether it's time to start cutting some jobs after massive increases the last couple of years.

it's kind of wall street behavior. before things get bad is when you start to print. >> there is a question about if it's going to be concentrated in the consumer facing business, or whether it would be right based including some of the investment taking units. what's your sense based on your conversations with leadership there? >> so, listen. the conversation we had in good times was with her you want to put money towards technology or put money towards people. that conversation gets even more significant and bad times. my question would be for goldman when you put the marginal dollar to work are you going to put it to work on a star trader or is it automated? that's the strategic position you have to make while you protecting your market and by the way one may pay off more than the other.

so you have to assume low performers are going to be taken a look at and this is not going to be from my understanding just dedicated to markets. they did by the business guy in the consumer business that added people in the last year. >> we have about one minute left. you caught up with the ceo of goldman only a couple of weeks ago. was there any indication of this? just thinking back to that conversation, any indication that this was coming? >> totally. i know the year is going by really fast. he did say, he said more pruning would be likely to come and again, the a percent you have to think about it in perspective here. it is more than what we are seeing at morgan stanley, it is more than barclays. but it has to be a harbinger of things to come here on wall street. >> we will see if the firm

confirms the effort. thank you for jumping on the phone we will catch up with you a little bit later. what you make of that in the last 10 minutes? >> how unique goldman sachs is. thus the row issue for me is how much is this representing a lack of inability to reach profitability targets. a lot of people have raised questions investors versus something that is more wholesale having to do with the environment especially after how much they beefed up. you have to imagine it's going to slow a lot and that's going to create a lot of pressure. is it going to increase that much? this all goes back to the rates picture. if they stay where they are how many companies are going to want to refinance? >> goldman sachs set to cut as many as 4000 workers, the stock is down by about 1%. coming up, sam stovall of cfra. from new york, this is bloomberg.

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>> we are going into this environment, fewer hikes, it's

not a question of how fast we raise rates. it's how high and how long can we keep it there? >> i think for the time being they are focused on inflation. >> if we are going to see it fall back it's going to be a challenge that's going to have to be met a more aggressive the lessee action. >> the market will realize that inflation is sticking. >> this is bloomberg surveillance with jon ferro alongside tom keene and lisa abramowitz. >> this is bloomberg surveillance. tk back on monday. goldman sachs according to center fall and cut as many as 4000 workers and i have to say i have to repeat what i said five minutes ago. i thought they accident lipid an extra zero on it because we reported the number might before hundred. 4000 is way above what we were

looking for. >> just say there is a question about whether this is idiosyncratic to the banking industry or if this represents something broader especially because the banking system is usually a bellwether of what's to come and people have been saying these are the areas that built up their stuff disproportionately to not make cuts during the pandemic. perhaps they have more to cut but it doesn't represent weakness in the labor market. >> the bank workforce, that is the number. have to see if goldman confirmed any of this that is a big report. that is a very large number to put out there. >> but the reporting earlier indicated a cut lower than that. also of magnitude much lower over at morgan stanley there is a different tone on wall street especially as the dealmaking operation grants to a halt. even the mortgage operations, can you imagine what a mortgage

banker is doing right now? >> it's interesting. it's not about a business environment it's about the past and it wasn't just about the hiring it was the fact they weren't laying off the people the way they typically would because of the objects of doing so given the economy we were in at the time with the bank dropping your so in the pandemic. it's fascinating to see how the couple of years played out and how it will over the next 12 months. >> we are seeing that with respect to layoffs in the tech companies as well. the areas that did lay off and mass -- en mass. now, there is still the hiring, this is why it's a complicated moment to understand the tightness or looseness of a the labor market. >> are we normalizing is that the way to look at this? when you go through that pace, and they talk about the fact of what they used to do, or they used to in a typical year some

employees are laid off and haven't received a bonus they have not done that in the last couple of years. can you say this is normalizing? >> may be. there is nothing about this moment that's normal. i don't know that i can say it's normalizing. perhaps we are getting back to a new normal we are establishing through a pretty rough process. >> we catch up with the fed's view on all of this. matt kicks off the fed speak you have been waiting for. >> 3:30 p.m.. >> you wonder if they are a little more blunt in a way that chairman powell is not an with the research you get a clear view of how much a be things are starting to crack, just a little bit of dissent. it makes it difficult for the venture to reflect a consensus that is not there when he goes into the news conference because the difference between chairman powell and the chairman of the guard we heard from the president of the guard yesterday. chairman powell on wednesday.

president of the guard, straight down the middle. >> she understood the political side of it perhaps more than chairman powell did. that said, he also said they are not going to cut rates. people just don't believe them and at a certain point you have to wonder what data are they getting such confidence from? if the fed is looking past and saying stop it. >> looking into next year, bank of america 4k, year and 2023. counter fitzgerald 4100. 4k goldman sachs, 4k hsbc, jp morgan 4200, morgan stanley 3900. you get the picture here. there are a lot of people bunched around 4k. our next guest is saying something a little bit different. 4575. sam, walk me through what ultimately you are a lot more

bullish than the bulk of the stream going into 23. >> i guess some could accuse me of being a pollyanna. when life gives me lemons i try to make whiskey sours. when i look at the expectation, i'm saying right now that like a deflating holiday lawn ornament the powell credit -- press conference and today's goldman's have drained investor hopes of avoiding a recession but i think it's going to be a mild recession. i do think the fed will continue to raise rates for the first quarter but then i'm reminded of history saying on average 8.5 months after the last rate hike, we see the fed starting to cut rates. if we do end up seeing this economy getting weaker then by the street and seeing what the fed response to, i think investors will be looking across the valley into the second half

of 2023 and that's where we end up seeing an upward movement and the real year end target depends on whether we retest the 3500 though on october 12 are we set an even lower blow. >> what is the downside in the first half? >> downside i'm thinking 3500 for the s&p 500. that is the october 12 low. it is a retracement level of the prior bull market move and also i think that was an area of significant support and so that is my first lowell. >> you are saying the recession is short and shallow why do you think the recovery is as severe as the one that you are calling for in the second half? what drives it? >> i'm a big believer in history. history is a great guide. certainly not gospel but when you look to all of the bear markets since world war ii that

were accompanied by recession, we ended up coming back into a new boom market. rising 20% at an average of only three months and in five of those, we ended up in a new bull market after only one month. also what we found is that 12 months after the market was higher by 47% on average with a low watermark being 30%. basically, it all depends on the actual bottom takes place and my feeling is that we are likely then to see the evaluation being taken advantage of. >> when you talk about history and post will for two, going back to 1918, it's a playbook that goes back to another era of pandemics and conflict as well in world war i and every that was going on then. is that a better kind of measure of where we could be in the sort of difficulty getting out of some of the issues facing not only the market but also just generally geopolitical peace?

>> no. and i say that because like the valuing of crypto today, we didn't really have the required earnings information for individual investors to make decisions back prior to the 1930's. also, we never had government supplied economic data since the late 1940's. really, you should be looking at data only since 1950 or so. i go back to world war ii because that's sort of a dividing line. i would say the reason i don't go back to the 19 teens it was more of a billing situation because you didn't have the free flow of financial or government economic data. >> is china reopening had winter till went to your call? >> i think it's going to be a tale wind globally. the beginning of 2022, we were going to see a 4.6% gain in global gdp.

that estimate now is below 3%. and when you look to 2023 it's even weaker. but if you look to china, that's really the only country that is excited to show an improvement in gdp in 2023. to a broader extent the emerging markets are likely to show an improvement in gdp next year or as advanced economy is predicted to show a slowdown. i would think it's going to be a tailwind for the global economy. >> it was so much easier when we used to talk about global growth. now looking at 23, it's so different. europe recession, u.s. recession, china reopening. his inflation going to be sticky as it rolls over? that's going to be the call for 23. >> energy prices, where are they going to be? pick your issue and it's good to be a moment of confusion. but you wonder whether the

consensus, and you point to this, simply because how do you have a consensus with all these variables? >> i think there are people looking exclusively at the labor market. tech news to one side, labor news to one side, look at the data. where is the recession? >> it's not just the numbers in terms of the unemployment cleanse it's also the numbers with respect to wage gains. they are accelerating. they are not does inflating. >> 4575 12 month price target, the s&p 500. >> i thought this was fascinating. she things is a big problem. he things is going to be inflationary. he thinks it's been a gift to the u.s. and europe that china has been off-line not trading for base commodities. it will be a big inflationary push went europe is entering recession and the u.s. is

slowing down. a very controversial take on the same event. this is the reason why it is such a complicated moment. is that a good thing or a bad thing? >> terminal rate, it's not going to be the long energy. that's what we are sticking with. >> that is what some people are saying. tracing for my personal? >> i'm just wondering. >> that seems to be the case that yields are going to be higher. >> 18, 19 minutes we will at the on this. chairman, vice chair, we will catch up with one of those. john williams, the president of the new york fed to sitting down with us in about 18 minutes. this is bloomberg. keeping you up-to-date with news around the world i'm lisa mateo. in other large-scale russian attack on ukraine's infrastructure a barrage of

missiles knocked out power across ukraine today the capital of keep was one of the cities hit and the attack comes a day after the top ukrainian army commander warned there is no doubt russian forces will try to seize kyiv as soon his next month. a russian assault in the spring failed. in beijing, a rapid covid outbreak turned the chinese capital into a ghost town. that underscores the president's trend of covid zero. entire families and offices have become infected in the span of two days. that could be a preview of what the rest of china faces. american nobel prize winner faces charges. a former student accus is an accuser. students claim he sexually harassed them. his lawyer says he never had any improper directions.

goldman sachs reportedly plans to cut as many as 4000 jobs, that's according to the news outlet that said it could amount to a percent of the company's workforce. private equity firm admin international has agreed to buy max for about $4 billion. maxr is worth about 4.4 billion. global news 24 hours a day. powered by more than 2700 journalists and analysts in over 120 countries. i am lisa mateo this is , bloomberg. .

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>> interest rates still have to

rise significantly at a steady pace. to reach levels that are restrictive to ensure a timely return of inflation to 2%. our future policy rate decisions will continue to be data-dependent >> that was the start of the news conference later on. we are not pivoting, we are not wavering. just punch, punch, punch, punch. >> there was one message. >> without a doubt. >> you are misinterpreting me every single time. do you think she rehearse that? >> there will be no pivot. >> with the bond markets listed unlike the treasury market which has not been listening to chairman powell.

let's talk about the front end of the curve and into yesterday. that was a 39 basis point move. that's not normal. up eight basis points and when you think about things that are normal, to bring up the german two-year on my screen. today the german two-year is up >> some basis points. it's shocking considering where we have been. it's also shocking to think we are heading into a downturn and there will not be a physical response that is capable through borrowing at these kinds of levels. that's what i think the italian response to this is interesting and that's perhaps what you are seeing a bit of softness in the euro as well. what is this mean in terms of the reaction and the offset to any kind of downturn? >> more rate hikes. what did you make of that? >> it beat most people's

expectations. we now look for 3.5% as the terminal rate for this which is pretty high, higher than we would have expected. >> do you think it will be there long? >> if you start looking at futures expectations and the interest rate curve you start to see the inversion get much bigger. look at september 23, futures against september 24. now looking at 50 basis and version that was before this move. so the market, it can believe in the term of the terminal rate but it's not going to believe in the idea that he can stay that high. >> in other words given the fact that the ecb seems determined to move forward with this is this going to be a parity type of situation for the euro again or you do think that it will break in terms of what the result will be from the ecb? >> it's probably more of a

barrier to consistent gains for the euro rather than instant reason for it to go back to parity. if you look at it for example, at the end of september we had the same 50 basis points and version between september 23 -- and september 24. the market, again was pushing down 2024 rates quite aggressively for a few months and the dollar fell through that period of time. at a much earlier stage for the euro, i think you can go a bit higher still but i would keep a close eye on exactly that same spread. as that gets more inverted that takes away the steam, i guess the energy behind the euro. >> if you end up with a weaker euro on the heels of a hawkish proclamation from the ecb, this increases the inflation risks in the euro region. how do they counter that? >> it was a problem this year.

we talked about it. regina shifts, sometimes it's all about race differentials. other times it's about risk. what do you think is the most dominant factor right now what is going to be the dominant factor in 23 for the fx market? >> it has an important factor. that is soy the euro-dollar is back at 106. i do think that's a significant factor but there is also the terms of trade story as well. remember the euro was not weak because of the differentials it was weak in early the year. europe got lucky we have a very warm winter thus far in the energy supply problem has been less of an issue than people thought. both of those factors play into it. >> on the structure story for a moment there were complaints by

the europeans that the euro is too strong. negative rates in the summer of 2014 to fight against the and push back pretty hard and we had some success. the germans always got the blame for it for running a surplus. even on we have difficult times on the periphery there was something that persisted. are you seeing a structural shift away from what was dominant may be 10 years ago and what to sipping for this currency? >> there has been a structural shift because night you have the area as a whole with the deficit. and the big collapse in german expert's -- exports is the energy that has come through as well. we have to see the structural shift is going to persist and the net result of that is a weaker euro then has been the case. it also requires the euro to be supported more that it has

in the past. one of >> the company factors. >>thus the european side of things. from the u.s. perspective we are less than hearing from john williams after that speech that we heard from jay powell. what would a truly hawkish fed or perhaps shall i say the market believing what the fed is saying due to this dynamic? would that give strength to the dollar or weakness just because it would indicate a weaker economy going forward? >> i think at the moment the burden of proof has shifted quite significantly. as far as with the data is showing. previously, we were consistently beating to the upside on inflation outcomes and the market was chasing that reality now we've had two months in a row of downside the market doesn't really give the fed all that much credibility in its predictive power because what we have seen in the last couple of years.

>> especially the last 12 months. >> it makes little difference with the fed says to the market's to inflation. if the market sees soft data it's going to land with that. and it was actually turned out to be the case and you see that in the inversion i mentioned. the only way that's going to change in my view is that the data changed. or if the labor market, is going to take a while before we see those numbers so i think anything the ventas right now is going to be not that impactful. >> they were looking for 90 basis points. we got 400 plus. the ecb president 12 months ago was basically indicating we might not get a rate hike for the all of 2022. look at where we are now. even the last meeting it wasn't

the base case that we get a recession on the euro side. and i here we are talking about hike. what's interesting for me this week is why we believe the ecb a little bit more than we believe the federal reserve. the credibility is shot over the alaska full of years. why are we paying more attention to the rate story that the guard is selling. is that the difference in the data? i think it is. >> it's also the idea that they have not taken the decline in natural gas prices, the fact that there has been a more controlled situation there is any kind of reprieve for breathing room and i didn't think they give any credence to that whatsoever. it's a good question because both banks struggled. >> awesome to have you in the studio. as always, just briefly this comes from a news organization in the united states,

goldman sachs set to cut 4000 workers. that number much bigger, a multiple bigger of what we expected of little earlier this week. that it is indeed confirmed. >> what we are seeing from our own reporting it seems to be a person familiar with the matter telling bloomberg this is the case is well. more hints that this could be very much the case. >> the new york fed president john williams sitting down with catherine hayes live on bloomberg tv and radio. later this afternoon we pick this up in the opening hour. this is bloomberg.

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>> about an hour to go before the opening bell. continuing a bit ongoing we are getting more insight with matching the reporting from four thousand job cuts over at goldman sachs as they trimmed their workforce by a potential 8% in the wake of two years of not really cutting staff. you are seeing s&p down about 1%, euro a bit of softness, a bit of dollar strength. 10 year yields a bit higher but

nothing like we saw over in the european markets. 351 on the 10 year. right now as we look at goldman sachs and the question of all of the job cuts there is a question if this is a broader story of layoffs in a weakening labor market or if it is indio socratic -- idiosyncratic with bank markets. kathleen hays with one of the leadership members of the federal reserve to answer some of those questions. >> lisa, thank you. president williams, thank you for joining us this morning on bloomberg television, so happy to have you here. we are in the new york fed museum in a year when the fed has been making a lot of history. so let's start with the meeting this week and what came out of it because we got the move up in the restrictive rate that was even more restrictive than people thought. inflation has stayed high,

probably harder than you thought it would just a few months ago. with this position not do you think you found the product where you need to be? >> i think when you look at the essential tendency of my colleagues expect the rate to get to 5, 5 per 5% next year. hubbell a that gets us to the policy that will bring inflation back to 2%. i am getting increasingly confident we are getting closer to that but obviously we have to watch the data. inflation and other data have surprised us. i think we are getting to a better place. >> just about two weeks ago, you said that the fed funds rate has to get above the inflation rate to bring down inflation. how far above inflation does it have to get? >> that's the question, right? we talk about this in terms of bringing inflation back to 2%.

to me it's about getting it high enough and keeping it high for a while, for enough time to really see clear signs of inflation moving back down on the we did you percent. my view is to think about real interest rates. if you look at the median dots in the economic projections we put out you see the real fed funds rate minus the piece of inflation around 1.5% i think that's a reasonable view of restrictive. if it sufficient we have to watch the data. to me that's were i'm thinking right now. >> many top economists who are saying, it's looking more and more like you are going to have to go higher even then way you are now a be something like six, may be something heading towards 7%. could you see that happening and what circumstances, what would be happening for that for you to go ahead like that? >> that is not my baseline as i

indicated. but of course, things can happen differently then we expect and we have to expect around inflation but also how strong is the economy? do we still have these imbalances between supply and demand? right now, pcu inflation is 6% or less. and we have clear signs in the labor market such a me the question is really what we see in inflation and the supply and demand imbalance again my cases we don't have to get that high. i think we have favorable developments on the way. supply chains, definitely are getting better around the world. we are seeing that in a lot of different data and we are seeing some of the prices come down. a reversal of some of those pandemic era things that pushed up inflation so we have a few factors that bring inflation down, to three, 3.5% but the

real issue is getting it all the way to 2%. >> is the message from wednesday that, and this ties in, we might have to go higher is the message that if it's not coming down as we expect then we are clearly open to going higher, taking the next step? >> we are going to have to do what is necessary. it could be higher than what we have written down or we could have to increase our interest-rate projections. inflation has been stubbornly high as many people have said. in the economy remains very so yet. remember the unemployment rate is 3.7%. some slowing demand for labor but still a very strong imbalance between supply and demand. >> there were two surprisingly good reports going into this meeting as a lot of people thought good news for the fed, maybe they're not going to be quite as aggressive. but at the same time, what

happened, 2020 three inflation forecast goes up. how did this happen? what is getting your view on inflation? again, cpi and the pc and the pc oil over. >> relative to say our earlier projections from september, i think you have to think about what is happening. we are seeing good news, i like good news on inflation reports. some of the areas we have been long and thick -- expecting those inflation rates to come down. that something we have been expecting as part of the baseline forecast. where inflation is so high is in these corner service areas the areas which are probably going to be more persistent and really reflect the imbalance between supply and demand. so, sure, we are seeing some good signs. i am also seeing good signs in the new thesis and apartments

and that should eventually start coming down in the latter part of next are but again these other core is inflation is so high. sure, some good news but the underlying issue, core services inflation is still very much there. >> your forecast for unemployment next are is a big jump. you see it much weaker up to, looking at 6.4%. are looking for gdp to be much weaker than you thought three months ago. down to 0.5%. so is this the kind of forecast consistent with a soft landing? is it consistent with something maybe not quite that good? >> i think it's an economy that continue to grow. the media has run half of percent growth so as the economy is growing the employment rate

is rising somewhat. so i don't see this as a recession, we are clearly not in a recession right night -- right now. it is an economy that is seeing imbalances between supply and demand. >> is the retail sales, or week across the board pretty much, is this a canary in the cold mine for where the economy is heading ? you want to get final demand down this is may be an early sign that you succeeded? >> we have to look at all the data on that. consumer spending has been jumping around a bit what are two quarter. more resilient perhaps and i was expecting so we have to go through all that data and really see, kind of the underlying strengthening. that data doesn't change my basic view that we are going to have an economy growing modestly

over the next several years. >> core services, seems like it's the key indicator now. we have to see that coming down for the fed to be convinced that inflation is moving in the right direction. >> it is most closely related in many ways. some of these other categories which are part of the inflation index, they are really about the special effects part. i think the housing market we are seeing indicators eventually. this is the area that's not coming down and we definitely any to get to 2% inflation. >> a lot of focus on labor and wages in that part of it, right? do you think there are signs of a wage price spiral right now? is that one of your concerns?

the trend is still too much hope for us. >> i don't see anything to indicate a wage price spiral. a couple points, inflation expectations have been coming down. they have been while a good for long. we have also seen on the survey and in michigan survey expectations are coming down so i don't think witnessing that kind of dynamic of people expecting higher inflation and demanding higher wage increases. it's kind of one of the barometers of the job market. labor demand has been really strong relative to available supply. as a supply gets better, better balance it will be born inconsistent with long-term percent. >> what do you make percent of the southwest airlines contract is signed, 24% increase of wages

over the next four years? is that a concern? >> we have seen a lot of adjustment in wages across the country. i'm not going to point to any specific one. given where inflation has been, where the labor market is, it's still quite high. to me it's really about tracking how the county does next year. >> focused on financial conditions are you concerned about the push pull between the fed? >> i think we need to be, and we are being clear on what we are trying to achieve. and how we are going to achieve it. i think economic projections provide a nice roadmap and how we see policy over the next couple of years.

i always look at a broad, sorry financial condition understand how that fits into our outlook. right now i know a lot of summer ticket -- market participants are more optimistic about inflation coming down. i look at the real interest rates, pretty much everyone understands that they need to get restrictive and stay there. >> is that an issue for the fed when you are trying to move policy in a certain direction. you want to tie it into the end of the markets rally and could the financial conditions soft and? is that an issue? does that make the job harder? >> it does that make it harder but it's another one of those factors that a lot of things need to fit -- feed into where the economy is going. financial conditions have taken quite a bit. it's consistent with our moving towards a restrictive policy. that's an important part of the

transmission. >> i want to ask you one last question because we are hearing this a lot that the fed let inflation get out of control for whatever reason and that this may have awarded her the credibility. >> try to get inflation back to 2% go, we are communicating that way. i don't think we lost credibility of course at all. i do think we are united in our focus to getting inflation back to 2%. we have taken on strong policy actions over the past year and as we've shown we are going to continue to take the actions to get inflation back to 2%. we need to get that done and we will. >> 2023, here it comes. thank you so much for joining us today. >> thank you. >> lisa, back to you. lisa hayes with john williams of the u.s. federal reserve not

seeing signs of the 1917 wage spiral. talking about growth coming down but not necessarily recession. bloomberg confirming the news that goldman sachs will cut as many as 4000 jobs. top managers have been asked to identify cost reduction targets. they are all continuing to deliberate on this after a period of tremendous growth just to give you some perspective. the workforce grew by 34% by the end of 2018 surpassing 49,000 in this year's third quarter. we will have more of a sense of the potential ramifications from the s&p futures down, this is bloomberg. this is ge healthcare, creating a world where healthcare has no limits. this is ge vernova,

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>> central bank sees more slowly

into the recession as they last longer. we'd expect kind of double the normal length of our session because the fed is not going to be at your back for a long time and that's a big deal. >> that was greg jensen after talking about how a reopening of china is not necessarily a tailwind for risk assets. it could be a headwind if you do get a situation where it use inflation at a time where europe is heading into some sort of downturn. we are seeing futures lower ahead of the open adding to the losses of yesterday. at colton's -- goldman sachs 1% decline after reports of potentially 4000 job cuts euro gained a touch. basically flat. 10 year yield up just a little bit. not close to the 10 year build we heard. oil, a little bit lower as get

people get concerned about the prospect of recession. we have been talking over morning about goldman sachs and potential layoffs as they reshape what's ahead to come. shares are down almost 2% and there is a question about how the banking industry is shaping ahead of the downturn. where people are living, where they are moving to, and the premise was interesting to me because it was a hedge fund founded my a -- it is not what he wants to talk about you want to talk about a whole list of other things having to do with the real estate market as you i but i want to start here because of the goldman sachs news. do you see a wholesale shift in where people are looking to live? were people are willing to spend money and allocating your capital accordingly? >> pleasure to be here as you

mentioned i'm head of real estate. it is a $50 billion management firm we manage real estate investments in approximately 100,000 single-family rental homes. great question, our investments over the last 10 years have really followed a general theme of cheaper and warmer. so the migration trends are from generally the coastal cities to places in the southeast and southwest so i think we will continue to investigate in those locations. but to your point about opening an office in miami, our job is to find it -- investments for our investments but also attract the best human capital. as we become more flexible that can change. >> we are talking about the potential for layoffs and people are concerned about the housing market. how high mortgage rates, how is

the pace of the capital that you deployed? change this year versus the same type luster. >> it's definitely slower as interest rates have gone up but the interesting thing is what the fed is doing with the interest rates, i was a deliberate demand delay destruction. to tame inflation, because that is interestingly stimulating demand because as he pointed out it's more difficult for people to buy so our view is over the long-term rent is going to grow faster in home prices. >> the evaluations i and their particularly the cheaper and warmer places that you're talking about. do you think the anecdotes are in accurate and don't have what you are seeing on the ground? >> i think people during covid, data was distorted or smooths

out so historically, pre-covid pre-this surge in demand for all kinds of goods and rental housing or even homes for purchase there is always an element of seasonality. home prices usually go down in the back end of the year. almost all of the red growth is it my food and that's because i buy it or make it and that being said. i do want to point out as you reference job losses is that job losses in fear of recession which is in the media and the news every day is probably having a dampening effect on household formation. we are not trading these homes we are investing long-term. the fundamentals look great as millennials move into the peak household formation period. they want a single-family home. >> as you raise capital, you think about when you want to

deploy it. i do wonder if you are expecting some sort of dislocation that will offer a better price entry point? >> absolutely, i think it's an incredible time for single-family homes is perhaps only institutional real estate that has been priced to the reality of people today. we are relatively constructive on home prices. we think they will continue to fall a little bit next year. but the housing market is very stable because essentially 83 million americans have a mortgage that it is 3.25% interest rate. most americans cannot afford to sell their house and buy a smaller home. a bigger loan a bigger expensive -- expense. >> a bunch of others that have

gotten into this area are they selling? i they paring back? of the starting to look around for potential interested buyers? >> we buy homes three days. we bought them one of a time -- one at a time off of a listing service. we buy homes from other portfolio operators and we buy homes from homebuilders. we see perhaps the best opportunity today to buy from homebuilders because the mortgage is at 7%, they are having a hard time selling the inventory. it's a good opportunity to partner with homebuilders to bring affordability. >> what regions are you looking in? >> south and southwest it is sort of cheaper and warmer. phoenix, las vegas, tampa, nashville. >> as more people have gone in there is a political question especially as the fed is trying to double done inflation and they talk about the renter. how much eu concerned, how do

you weigh that kind of calculus? >> we have a tendency to be very mindful of at that and we are focused on -- residents should be apple to choose the residence they want to make the determined if they want to rent or buy we are focused on, we just announce a partnership which essentially builds positive rent -- credit scores who pay their rent. i wasn't aware 40 million americans are so credit invisible. we are helping them while they are residence with us. when they built -- pay their rent to build their edit score so we are helping them on that path. >> is it taking unger to set up people at this point?

are people pushing back? are you feeling some of the pain will talk about when it comes to inflation? >> to a certain extent. some of this is seasonal so people forget this time of year that usually it takes a little longer and it runs good on a little but when we look at the top of demand data and technology really powers what we do. we have an operation committed to serving residents and giving them a great institutional experience. people are interested in looking at our homes at the prices we are offering them. it's up over last year. so we don't see a decrease in demand. >> are there certain regions that you see a much bigger price of hind than that? >> you tend to see more in the tech focused region in the east

and west because we are not investing their that's the national number. >> even though there has been such price depreciation? >> if you look at the, where the migratory trends are it's cheaper and warmer but we also like to follow you house so that's where people are moving. companies are moving there, there's demand. >> follow the u-haul's, i love that. really interesting especially as people talk about whether we start to see disinflation from rent. a lot of people determine rent does not usually go down. ahead of the open we are about half an hour 35 and its away and we do see the losses maintained perhaps people resetting after really reading through what judge powell said. this is bloomberg.

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jonathan: live from new york city this morning, the losses continue with the s&p down about 1% in the count down to the open starts right now. ♪ everything you need to know to get set for the start of u.s. trading, this is bloomberg the open with jonathan ferro. ♪ jonathan: life from new york, we begin with what pivot? jay powell says there's more to